CSPs and the public cloud: The big picture

Technologically, culturally and from a business model perspective, the public cloud is still a quandary for telcos, and may be more complex than traditional networking.

Tim McElligott

CSPs and the public cloud: The big picture

When US communications service providers (CSPs) CenturyLink and Verizon sold off their data centers in 2016 and 2017, many in the telecoms sector felt the blast of air from the burst balloon of telco cloud opportunity. But by the time AT&T and Telefónica followed suit in 2019, the sentiment had shifted from lost opportunity to a realization that there may be a better way for CSPs to participate in the cloud and platform economy: by partnering with public cloud providers.

Technologically, culturally and in terms of business models, the public cloud is still the quandary for telcos. It is no less complex than traditional networking and is perhaps even more complex. It is also risky.

In the minds of many CSPs, the public cloud still contains too many unknowns regarding security, performance, true cost of operation, interoperability, and control of both customer data and network connectivity. Most of all, it does not adhere to traditional telco processes, practices and standards.

Historically, any one of these concerns would be show-stoppers for CSPs that prefer a more principled engineering environment. This explains why, according to our research, most CSPs have deployed less than 5% percent of their operations software in the public cloud, at a time when investment in new operational and business support systems (OSS/BSS) should be on the rise in preparation for 5G.

More operators are deploying BSS in the public cloud, however, and this summer AT&T and Microsoft announced a blockbuster $2 billion, multi-year deal to move all AT&T’s non-network workloads to the Microsoft Azure public cloud. AT&T’s simultaneous proclamation that it is becoming a “public cloud first” company is likely to convince other operators to embrace public cloud, not only for telco operations, but also to target enterprise customers.

Two-way street

The onus in these burgeoning relationships is not all on CSPs. Cloud providers must work closely with operators to address end customers’ needs. They must also recognize that they are working with partners who have invested considerably in network functions virtualization – investments telcos are unlikely to abandon. Just as CSPs need to adapt to cloud environments, cloud providers must learn how to engage with CSPs operating multigenerational networks.

Download the report: Public Cloud: An essential but not singular solution for CSPs for the full insight.